Hard Bodies is a new entrant to the local health club scene. The owners of Hard

Question

Hard Bodies is a new entrant to the local health club scene. The owners of Hard Bodies realize that profit can be increased through price discrimination. Accordingly, the firm employs several different pricing schemes. For each of the following explain whether it is price discrimination and, if so, what degree of price discrimination it is.


a)- An annual membership to the club sells at a 50 percent discount of the total rate charged customers who choose to pay on a month-by-month basis (for example, the annual fee is $300 while the regular monthly rate is $50).

Explanation / Answer

second degree price discrimination: price varies according to quantity sold. Larger quantities are available at a lower unit price.

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